Global network of innovation

Management of Post Merger Integration Projects

Global network Failure Rates of Mergers: Overview empirical studies of innovation

General Analysis Specific Analysis

100% Consulting Science

85% 83% 79%

78,5% 80% 75% 72% 71% 69%

63% 62% 61%

60% 56%

50% 47%

40% 40%

20%

Mercer Bain McK Porter Harbison Europ. Cross Merger Bank Cross 1996 1997 1987 1988 Silver IMA Deals Border of Equals MoE Hayes

Border 1984 2000 KPMG J.P. Morgan IMA 1998 IMA 1998 1998 2000 2000

Global network Problems and Reasons for Failure of innovation

Problems identified in Post-Merger Percent o f Respondents Integration

Insufficient communication 58%

Financial/ synergy expectations unrealistic or unclear 47%

Compromises in new organization 47% structure

„Master Plan“ missing 37%

Missing momentum 37%

Lack of top management commitment 32%

Unclear strategic concept

26%

Missing pace of project 26%

IT i ssues adressed too late 21%

Source: A.T. Kearney

Global network Studies show: of innovation PMI is the weak point in M&A management

Main problem areas in M&A management*

Strategic Transaction Integration Analysis

* Example from: Boston Consulting Group: Multiclient study

Global network Integration Steps of innovation

BUILD

KEY ACTIONS:

• Evaluation of organizational models and selection of the Future Mode of Operations

• Determination of the prime and supporting process model in the context of a superior process model

• Validation of existing processes and adjustment where necessary

• Determination of the concept for the implementation of the process model (incl. Quick Wins) •

Refinement and agreement on roles, responsibilities and competencies (incl. P&L)

• Development of action plan for the set up of structural elements with regards to portfolio, employees, management of employees and ressources

• Definition and development of the target agreement system and the respective controlling requirements

Global network Integration Steps of innovation

BUILD

KEY ACTIONS (cont.):

• Mission critical: Detailled project plan and dedicated project

organization • Implementation of work and project teams:

- strategic: Countries, Production Sites, Brand- and Productportfolio - operational: R&D, Delivery, Logistics

- central: Finance & Accounting, IT, Law and HR

• Development of an internal and external communication concept/plan

• Define milestone and benchmarks to ensure and to proof the realisation of synergies and to ensure the compliance with the transformation plan

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